BUSAN — Busan will supply 1.2 trillion won (about $860 million) in policy financing to small business owners struggling with high interest rates and weak domestic demand, lowering their borrowing costs to the 1% range. The aim is to ease their financial burden before they fall behind on payments, by converting high-rate loans into low-rate ones and subsidizing interest.
The city said on the 15th that it had signed an agreement on 1%-range low-interest loans and high-rate refinancing for small business owners in management difficulty with Busan Bank, Hana Bank, KB Kookmin Bank, Shinhan Bank, Woori Bank and the Busan Credit Guarantee Foundation. The "Livelihood 112" financial support project — a name that plays on Korea's 112 emergency hotline —, the largest ever for a single program by the city, is expected to benefit more than 40,000 small business owners.
The 1.2 trillion won package consists of 500 billion won in guarantees under livelihood-stability agreements, 200 billion won in guarantees to convert high-rate loans into low-rate ones, 300 billion won for refinancing high-rate loans, 100 billion won for modernizing aging lodging facilities and 100 billion won for entrepreneurial small businesses. For new loans and similar funding, the city will cover 4 percentage points of interest for the first year and 2 percentage points thereafter, bringing the rate borne by borrowers down to the 1% range.
The measures focus on preventing delinquencies by cutting financing costs rather than providing relief after borrowers fall behind. The city pointed to mounting financial strain on small businesses, noting that bankruptcy and rehabilitation filings in Busan have risen and that guarantee default and subrogation payment rates exceed the national average.
Applications open on the 17th, while the high-rate refinancing and lodging modernization funds become available on the 28th.
"What small business owners need most is a practical safety net that lowers their financial burden and lets them keep their livelihoods stable," Busan Mayor Jeon Jae-soo said. "We will actively support their return to normal operations and their next leap forward."
